In the first installment of this series, I covered five questions brewery owners should ask their CPAs in an effort to improve their business operations and find opportunities for savings. Below, I discuss the final four questions:
How can I expense the cost of the building housing my brewery faster than I am using it?
You have a couple of different options available to you, both of which your CPA can discuss. First, you could purchase the building and perform a cost segregation study, which may allow you to shorten the depreciation time on the asset from the 39 years the IRS typically assigns to non-residential property.
You could also pursue a fixed asset review, which allows you to identify where you have the opportunity to reclassify assets for swifter depreciation.
How can I compare my financial numbers to other brewpubs and breweries?
It can be difficult to make an apples-to-apples comparison between yourself and a competitor, as a number of different metrics can be used to measure success. Your CPA can help you split your revenue streams into separate profit centers to help you get a better picture of how your business is performing. You’ll need to understand what portion of your revenues are derived from first and third-party distribution, retail, and restaurant operations. As you’re assessing each unit’s performance, you should use consistent baseline metrics to ensure you can accurately compare results (e.g., you should measure the amount of revenue derived from beer sales across each profit line in the same units—per gallon, per barrel, etc.).
From there, you can begin to look at how your performance stacks up against the competition. This will allow you to understand how your retail sales, for instance, may compare to that of a microbrewery without brewpub operations or your restaurant operations to a gastropub that doesn’t brew its own beer.
What pitfalls might I encounter as I create federal, state and city excise tax returns?
The most important point to keep in mind when filing excise tax returns are that each jurisdiction has different filing requirements. For example, some jurisdictions may require paper filings rather than digital, which could impact your overall timeline. In addition, some filing areas may be more burdensome and time consuming than others. For example, if you’re filing in Illinois, their RL-26-R requires that you report every resale customer and how much you sold, as well as their state and account number. Failing to collect all of this information from the start can cause delays in reporting and missed deadlines. An experienced CPA can help you get all of your ducks in a row well in advance, helping to ensure compliance and avoid penalties.
Is trademarking my name and brand worth the expense, even if my brewery is small?
Yes! Doing so will make you distinguishable from other craft brewers, especially if you cover your brewery name, logo and core brands. While you will want to consult with a qualified legal expert to develop your trademark, your CPA can help you identify opportunities to write off expenses related to the trademark depending on the circumstances, making this a valuable conversation in which to include your CPA.
This series of blog posts is not intended to be all-inclusive; you may have many questions well beyond what I’ve covered here. But no matter the size of your business or the nature of the ask, your CPA can provide valuable insights and connect you to the right resources to help your business thrive.